Shrinking Food Stocks, Surging Prices In 2011 FAO Warns

4 March 2011

World food prices surged for the eighth straight month in February amid growing demand and a drop in cereal production, the UN Food and Agricultural Organization reported, with its latest February Food Price Index the highest on record since monitoring began in 1990.

ROME -- Global cereal stocks are expected to fall sharply in 2011 reflecting declining inventories of wheat and coarse grains, the FAO announced. Growing demand for cereals and a drop in world production last year have pushed up international cereal prices, with export prices for major grains at least 70 percent higher than in February, 2010.

Price indexes for dairy products, meat, oil and fat also rose in February, the FAO reported. Moreover, unexpected oil price spikes could exacerbate an already "precarious" situation in food markets, said David Hallam, Director of FAO's Trade and Market Division.

"This adds even more uncertainty concerning the price outlook just as plantings for crops in some of the major growing countries are about to start," Hallam said.

In February, World Bank economists released figures showing that 44 million people have fallen into extreme poverty in developing countries as a result of food price increases since June 2010.

"We're sitting here not selling our food because prices have increased so much, people are not buying," Haitian market vendor Annette Jean told the World Food Programme recently, in a series of WFP interviews of people around the globe impacted by high food prices.

WFP has also drawn up a five-point action plan to help hard-hit countries deal with the spiraling prices.

It includes developing emergency food reserve systems, scaling up social protection safety nets, supporting smallholder and women farmers and strengthening 2009 international commitments on food aid.

It also includes establishing a multilateral mechanism to improve analysis of food prices, production and stocks to support G20 efforts to enhance transparency in food markets.

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